Employment relationships end for a myriad of reasons. Hopefully, it is on good terms and both the employer and the employee can move on without any angst. In some situations, even if the parting of ways is amicable, an employer may need to protect their business and its confidential information from an exiting employee. This is not to say that the employee is untrustworthy, or has committed some indiscretion against an employer. But rather, it is a precautionary measure that is usually spelled out in the original employment contract. Hence when it is invoked, neither the employee or the employer is taken off guard. 

The purpose of a garden leave clause in a contract is four fold;

  1. It protects the best business interests of the employer
  2. It provides for confidential information to remain safely in the hands of the employer
  3. It creates a limited period of time during which the exiting employee cannot work for a competitor
  4. In the event that the disengagement is due to a cantankerous situation, it allows for both parties to separate while not creating financial hardship for either

All of these protections are valid and often necessary for employers who allow employees access to confidential business information, exclusive suppliers and financial assets and growth plans. The short gap in access to this information to an employee who is leaving the company can give the business owner time to make any necessary changes to accessing sensitive information. These changes may make the information currently known to an x-employee less valuable and possibly moot.

As an employee being placed on garden leave, you do have some significant obligations. These obligations include; 

  • You cannot attend your physical place of employment
  • You cannot continue to perform any activities that were previously your responsibility
  • You can only participate if requested to do so by your employer
  • You must remain available to your employer to allow for transitional issues to be addressed
  • You must still abide by the existing terms of your employment contract
  • You may be unable to take another position with a new company if it directly competes with your x-employer
  • You may be prohibited from engaging in any other form of employment for the duration of the garden leave

While an employer and employee may agree that the employee’s salary will continue during the period of garden leave, there are other considerations that a garden leave clause should also clarify with regard to;

  • Ongoing accrual of benefits such as vacations time, holiday pay and sick leave
  • Ongoing health care benefits
  • The loss of commissions from sales that might have accrued during the garden leave period
  • Any restraint regarding future employment must comply with the restraint of trade laws and term in the employment contract

The way for an employer to prevent any legal issues arising out of gardening leave clause is to be sure the clause is properly written into the contract. In addition, it is wise to be sure to review the clause and secure the employees full understanding of its implications prior to the employee signing the employment contract. The best way to ensure that a gardening leave clause in an employment is legal and enforceable, is to seek the advice of counsel prior to including the clause in the contract. 

If you find yourself in need of assistance with this, or any other legal issue, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.